Published December 14-22, 2023
1
The Opportunity
In an earlier series, I delved deep into the concept of progency, illustrating its pivotal role in a brand’s journey towards profipoly. Now, I want to pivot the lens towards Netcore. Should Netcore venture into this territory? If Yes, what’s the roadmap? If No, what are the deterrents? Could the inception of “Netcore Progency” pave the way for Netcore’s own pathway to becoming a profipoly?
To set the stage, let’s recap the salient points from my progency discourse and the rationale for martech firms to integrate a progency strategic business unit (SBU):
Profitability Paradox: Brands with digital businesses have a profitability problem. While there is the good marketing (acquiring high lifetime value new customers), about half the budget is spent on bad marketing (wrong acquisition of low lifetime value new customers and reacquisition of dormant and churned customers). Redirecting part of this 50% AdWaste towards existing customers can help grow revenues and power profits.
Neglected Majority: Digital businesses, engrossed in new acquisitions and catering to premium existing customers, often overlook a vast segment. This includes the passive audience, those who sporadically engage or transact. These are customers who don’t engage with push messages, those who don’t complete transactions after visiting the website or opening the app, and the ‘one and done’ cohort. Because they were once important, many of these customers end up in the adtech retargeting loop, escalating costs. Think of the progency as closing the loop between acquisition and retention.
Martech’s Myopic Vision: Martech firms have focused on selling solutions without consideration of the outcomes. These solutions are priced on consumables (messages sent) or traffic (monthly active users). The onus of leveraging these tools falls on brands’ marketing teams, who, driven by the daily demands of growth metrics, often sidestep profitability. In fact, profitability is not in the marketer’s lexicon.
Bridging the Chasm: The divide between new and existing customers, between active and passive customers, and between Best and Rest Customers is not something which can be easily bridged just with the brand’s internal teams and martech tools. It needs a progency (product-led agency), a new entity which fuses product prowess, human capital, and performance-based pricing to convert the funnel frictions into digital gold. The progency is a middle path between product-centric firms and service-oriented agencies.
Progency Promise: The progency can unlock phenomenal value for both brands and martech platforms. AdWaste is a $200 billion opportunity, a magnitude higher than the market opportunity for selling software. Think of it as the after-market for software – with the unlock necessitating the technology and expertise of the platform vendor.
In essence, the progency is a novel idea; it is the next evolutionary leap in martech. As a key player in martech for the past decade, Netcore’s full stack SaaS platform serves hundreds of mid-sized and large global customers. The crux of this essay is whether Netcore Progency should exist, and can it win?
2
Netcore 2.0
I have been thinking of Netcore’s next avatar for some time. Here is what I wrote in 4M and Netcore 2.0: A Framework for Exponential Growth.
This new incarnation, Netcore 2.0, must be grounded in a clear understanding of the new realities of the marketplace. It’s no longer about how many messages are sent or how many active users are on the platform each month. Instead, the emphasis must shift to demonstrating tangible value to brands.
Netcore’s revenue model too must evolve, moving away from flat-rate charges to a performance-based model. In this new paradigm, Netcore’s success is directly tied to the success we drive for our clients. The more incremental sales we drive or the more AdWaste we help reduce for brands, the more revenue we generate. Such a shift not only ties Netcore’s growth to the value we provide to our customers but also differentiates us in a crowded marketplace, paving the way for a new chapter of sustainable growth and success.
In essence, Netcore 2.0 is not just a version upgrade, it’s a metamorphosis – a strategic pivot to a new way of thinking, a new way of delivering value, and a new way of growing. The ultimate goal is to create new kinds of ‘magical’ products – those that can power the next money machine, build an unassailable moat, and carve out a monopoly in the martech space. By focusing on utility and driving demonstrable value for brands, Netcore 2.0 can set itself on the path towards achieving these objectives.
…The task is a transformative one – moving from today’s Netcore, anchored in units, users and our unistack (unified stack), towards the Netcore of tomorrow, powered by ubiquity, utility, and uplift:
- Ubiquity: Our initial move involves defining Netcore’s comprehensive reach – being an omnipresent force that mirrors the ubiquity of the brand’s customer interactions.
- Utility: Building on our ubiquity, we turn towards infusing practicality and efficiency into the marketing process, thereby enabling cost savings and process optimisation.
- Uplift: The culmination of our efforts is creating an uplift – a tangible boost in sales that directly and positively influences the growth and profitability of our customers’ businesses.
In essence, Netcore’s evolution involves evolving from a ‘units and users’ martech company with a comprehensive unistack, to a ubiquitous entity providing tangible utility and meaningful uplift. This transformation enables us to accelerate our customers towards their ‘profipoly’ goals. In doing so, Netcore transcends from being a mere tool to becoming an indispensable ally in our customers’ quest to create their unique profipolies.
… Over the past 25 years, Netcore has carved a unique niche, blossoming into a $100 million revenue proficorn in the competitive tech landscape. But resting on laurels isn’t an option when disruptive innovation is reshaping industries. To thrive in the unfolding “Generative AI” era, Netcore must leverage its strengths, infusing them with ground-breaking ideas to stay ahead of the curve. It’s time for Netcore 2.0 to embrace the Day 1 mindset – the tenacity, agility, customer focus, and innovative spirit emblematic of a startup.
… For far too long, companies have focused on the small pool of martech spending even as the bigger ocean of adtech spending (with 50% AdWaste) has gone unnoticed and untapped. This is the opportunity for Netcore 2.0 along with its partners.
3
New Story and Strategy
In customer meetings, I have been telling a new story:
- I start with a new and memorable phrase to describe the problem. In Netcore’s case, the word I have been using is “profipoly” (profits monopoly). I tell a story about how companies like Google, Apple and Microsoft have created a profits monopoly which delivers exponential forever profitable growth for them – and keeps competitors at bay. Every business needs to aspire to become a profipoly. And I plan to show them how to do it.
- I discuss how marketing has made a wrong turn by not focusing on profitable A focus on branding, acquisition, and retention has meant that growth comes at the cost of profits. I show the state of brand P&Ls (profit and loss statement), and how marketing is one of the biggest contributors to profitless (profitless or less profits) outcomes.
- I then bring in the agents of change – the breakthrough ideas and innovations. This is the exciting part of the story – where the troubled past can give way to a happy future.
- I finally show the outcomes – happier customers with memorable experiences, and better P&Ls. All this can lead to sustainable profitable growth.
- I end with a roadmap and a hero – the 90-day plan (call-to-action) which needs a “Chief Profipoly Officer” to implement it. This also shows CMOs a possible future to the corner office, something they can rarely aspire to in their current roles.
I had also discussed Netcore’s future:
By bringing the focus on the long-ignored existing customers of a business, reminiscent of the Blue Ocean strategy’s value innovation, Netcore has the potential to redefine the martech space. The focus on moving away from the red ocean of me-too martech stacks to the blue ocean of a newly minted Profipoly Stack with multiple disruptive innovations is the “invention” that can power Netcore’s “counter-positioning” strategy. Netcore’s five-step blueprint diagnoses the issue with adtech, establishes a guiding policy focused on martech, and lays out coherent actions from pioneering innovations to redefining pricing models.
At its core, Netcore’s strategy embodies these principles. By focusing on the martech landscape and underscoring the importance of deepening customer relationships over mere acquisition, Netcore is defining its “where to play.” In the “how to win” arena, the brand aims to lead the industry in the profipoly transition, leveraging unique innovations. Instead of spreading itself thin in the vast digital landscape, Netcore is making deliberate choices to create unparalleled value in specific areas – especially for B2C/D2C businesses. It’s not just about participating in the martech industry; it’s about setting the gold standard, echoing the very ethos of “Playing To Win.”
Furthermore, the introduction of roles like the “Chief Profipoly Officer” is a nod to the strategic importance of aligning an organisation’s structure with its strategy, echoing Alfred Chandler’s insight. By suggesting a role that blends marketing prowess with financial acumen, Netcore is not just integrating two functions but redefining how organisations should perceive growth and profitability.
Finally, by championing a blend of SaaS and service, Netcore can balance both differentiation and cost leadership, enabling it to cater to a broader range of customer segments while simultaneously driving value.
In essence, Netcore’s potential transition to a profipoly isn’t just about rewriting its destiny but is a reaffirmation of the age-old strategic tenets. By drawing upon these classic frameworks and adapting them to the digital landscape, Netcore can tap into the vast AdWaste spending, exponentially grow the martech category, shape the next chapter of strategy in the digital world, and forge its Profipoly journey.
What I was missing in my previous thinking was simplicity. While I had the story, what I needed to do was to separate the stack (Netcore 2) and the startup (Netcore 3).
4
Startup
Netcore 1 is the business we do today: a combination of CPaaS (channels) and martech solutions (for engagement, experience and personalisation). As our website puts it, Netcore offers ”The Martech OS for your Profitable Growth” by “Empowering marketers to create meaningful customer connections through our AI-powered Customer Experience and Personalization platform.”
Netcore 2 needs to evolve this vision to create the Profipoly Stack, breakthrough ideas and innovations to unify data, experience, and communications, for driving engagement, conversion, and retention. While it retains the SaaS essence, it pushes the boundaries of what our platform can achieve.
Netcore 3 steps away to create a startup, a new business to create an amalgam of software and service, with an adtech-style performance pricing model. This is Netcore Progency, a paradigm shift in the martech space. Its mission? Profipoly engineering. A brand profipoly is not going to happen just like that. Even with stellar products, competitors are always lurking. While “magical products” are important, what will create the money machine, moat, and monopoly is how consumer-facing businesses manage their controllable costs and craft their marketing strategies. Today’s B2C/D2C brands have mortgaged their future to the Gods of our times: Google and Meta. In their quest for exponential forever growth, they have forgotten the “profitable” angle. Unless brands think of how they will create sustainable profits, they will be locked in a relentless battle against competitors for every customer. In this digital gold rush, only the shovel sellers (ad sellers, cloud platforms, and marketplaces) win.
This is where Netcore 3 – Netcore Progency – comes in. By seamlessly combining SaaS and service under a single umbrella, by leading with an AI-first “profipoly stack”, by focusing on the Blue Ocean customers neglected and ignored by marketing teams, by championing new metrics like the EnCoRe Triad, by advocating performance-based compensation models, and by eliminating constraints on marketing budgets, Netcore Progency positions itself uniquely. It aims to steer Netcore from the saturated martech stacks markets, carving a niche as a trailblazing, category-defining entity.
5
Comparison
Here is a table that differentiates Netcore 1, 2, and 3, suggested by ChatGPT and edited by me.
| Parameters | Netcore 1 | Netcore 2 | Netcore 3 |
| Core Offering | CPaaS (channels) and martech solutions for engagement, experience, and personalisation. | Evolutionary Profipoly Stack that unifies data, experience, and communications. | Fusion of software and service with an adtech-style performance pricing model. |
| Positioning | Established Martech Powerhouse | Next-gen Martech Innovator | Pioneering Progency Model |
| Key Features | AI-powered Customer Engagement, Experience and Personalisation platform | Integration of breakthrough ideas and innovations to increase LTV, predict next best action, and facilitate inbox commerce | Product-led agency with its proprietary stack, focus on Blue Ocean customers, championing new metrics like the EnCoRe Triad |
| Target Audience | Marketers looking for established martech solutions | Brands seeking advanced martech capabilities | Brands aiming for sustainable, profitable growth |
| Business Model | SaaS-based | SaaS-based with advanced features | Performance-based pricing model, aligning with revenue generation |
| Strategic Focus | Empowering marketers to create meaningful customer connections | Enhancing profitability with unified engagement, conversion, and retention solutions | Moving away from the saturated martech stacks market to target neglected customer segments, with a focus on profitability |
| Vision | Martech OS for growth | Profipoly Stack for profitable growth | Profipoly Engineering for exponential forever profitable growth |
| Differentiating Factor | Established and trusted platform offering comprehensive martech solutions | Introduction of the Profipoly Stack, pushing the boundaries of the platform | Fusion of product and service, targeting neglected customer segments, and pioneering new compensation models |
| Challenges Addressed | Meeting the current martech needs of brands | Evolving the martech offerings to cater to advanced needs | Addressing the gap between product offerings and service requirements, focusing on profitability, and targeting overlooked customer segments |
I also asked Claude for a summary. Here is a lightly edited version.
| Parameter | Netcore 1 | Netcore 2 | Netcore 3 |
| Focus | Martech stack + CPaaS channels | Profipoly stack – next-gen AI martech innovations | Progency – Combining SaaS + services |
| Offerings | Engagement, experience, and personalisation solutions | Breakthrough ideas and innovations to unify data, experiences, communications | Seamless blend of martech products and specialised services |
| Key capabilities | CDP, analytics, automation, personalisation, multi-channel communication | Inbox commerce, digital twins, velvet rope marketing, atomic rewards, combining catalog and customer data | Proprietary profipoly stack, campaign strategy, customer profiling, reactivation |
| Revenue model | Subscription-based | Subscription-based | Performance-based fees |
| Target customers | B2C/D2C brands | B2C/D2C brands | B2C/D2C brands struggling with profitability and martech underutilisation |
| Value proposition | Empowering marketers for growth | Driving engagement, conversion, retention for profipoly | Unlocking exponential value from martech investments |
| Pitch | Martech OS for growth | Profipoly stack for exponential forever growth | Combining product and service to maximise lifetime value, leading to a profits monopoly |
| Focus customers | Best, Rest, Test customers | Best, Rest, Test customers | Overlooked segments – dormant, low-engaged, one & done |
| Metrics | User and engagement metrics | Profipoly Score | EnCoRe Triad – engagement, conversion, retention |
| Budgets | Conventional martech budgets | Conventional martech budgets | No budget ceilings, growth linked to outcomes |
| Key differentiators | Comprehensive Martech stack | Multiple innovations to power the Martech stack | Tech and services expertise, blue ocean focus, aligned incentives |
| Outcomes | Meaningful customer connections | Higher LTV, Better Frequency of Purchase | Growth in lifetime value, revenue expansion leading to higher profits |
In summary, Netcore 1 represents the foundation, Netcore 2 incorporates innovations to boost marketing effectiveness, and Netcore 3 (Progency) aims to maximise value realisation through a strategic blend of products and services targeted at neglected segments.
PS: It is quite amazing to see how good the Gen AI platforms are. But they are only as good as the content we give and the questions we ask. In this case, the foundation was my writings and ideas.
6
Yes or No
With this background, let us take each of the questions I had posed at the start of this essay.
- Should Netcore venture into this territory?
- If Yes, what’s the roadmap?
- If No, what are the deterrents?
- Could the inception of “Netcore Progency” pave the way for Netcore’s own pathway to becoming a profipoly?
Let’s start with the first question. Should Netcore venture into the progency world? My answer would be an unequivocal Yes for multiple reasons.
First, there is a genuine problem in the market. Overspending on adtech has created an imbalance for brands. And where there is inefficiency there is an opportunity for entrepreneurs. There is no sustainable path to profitability for brands other than getting more from their existing customers. Current martech solutions offer utility but their complexity leaves marketing teams underwhelmed. This is leaving engagement, conversion, and retention funnel frictions as unfixed. A solution is needed. And it cannot be yet more martech features. A paradigm shift is needed.
Second, Netcore already has an established, full-stack martech platform. Launching a progency maximises the value of this asset.
Third, Netcore needs to move away from the red ocean of martech stacks and features arms race to something which can genuinely solve the problems brands face and thus unlock the $200 billion AdWaste. It is a problem that cannot solely be solved by tech and Gen AI. It needs a holistic solution which also offers a new business model for brands. In fact, one of the biggest benefits is that it would make Netcore’s relationship with brands stronger, making it harder for competitors to enter.
Fourth, in the saturated scenario of martech, getting customers to change martech vendors is not easy. Yet, no CMO I have interacted with is genuinely happy with marketing outcomes – there is typically a disconnect between their expectations and what the platform delivers. Most customers who switch today are unhappy – either with the pricing, or the UX, or the service offered, or a combination. New features are generally matched within months by competition. Often, the problem comes down to support and service. When there is a problem, the pure SaaS martech players do not have humans who can intervene, comfort the customer, and solve the problem. This gap underscores the latent demand for a progency.
Fifth, the timing is right. Profitability was not top of mind for most brands a year or two ago when it was all about land grab. With capital both from private and public markets at a premium now, brands are going back to basics. Unfortunately, most are making the mistake of cutting martech budgets because they are too scared to touch adtech budgets lest their new customer pipeline sputter. It is much easier to pay agencies to keep the inflow of clicks rather than work to figure out how to deliver personalised recommendations to customers at scale. Once again, a silent call-out for that magical entity which can do both – drive growth and deliver profits.
Put it all together, and there is a clear opportunity for a progency. Netcore as a martech solutions provider is well-placed to make it happen. With no external investors, creating a services business is not anathema. With a profitable balance sheet, Netcore can easily make the investments needed to create the progency startup. Most competitors, on the other hand, are still not profitable and therefore have constraints on what new businesses can do. (One of my favourite quips in meetings is: why do you think those who are not profitable themselves can help you in your profitability journey?)
In short, Yes – Netcore should start a progency. It’s a strategic masterstroke waiting to be executed.
7
How
So, if Netcore had to create a progency, how should we go about doing it? I will reframe this as: if I was an entrepreneur tasked to build Necore Progency, how would I do it?
First, I would put a multi-disciplinary small team together – engineers, product specialists, customer success executives, and domain experts. Maybe a couple of each to begin with. I would want people with a compass mindset, rather than those who are more comfortable working with maps. We will be going into unchartered territory so those who can experiment and work with uncertainty would be preferred.
Second, I would get the team to list out the problems that prevent high metrics for engagement, conversion, and retention. This would mean analysing the data that already exists to get a deeper understanding of macro trends across brands. Armed with the data, the next step would be to create playbooks with best practices to solve the problems. This would need to be then customised for different industries. In fact, to not spread ourselves too thin, I would focus on 1-2 verticals: perhaps eCommerce and BFSI (banking, financial services, and insurance).
Third, I would begin preliminary conversations with marketing teams we know. I would offer to do a Profipoly Audit, thus calculating the Profipoly Score and the EnCoRe Triad. With this, I would ask the CMO to decide which is the most pressing challenge to be solved. I would then craft our proposal in a way to ensure it does not conflict with what the marketing team is already doing. In other words, the CMO needs to see this delivering new revenues at zero upfront cost and minimal integration hassles. So, no downside and the possibility of a good upside. This would be good enough to get a few pilots started.
Fourth, I would not worry too much about the initial pricing model. The need initially is for a few “design partners” whom we can work with and craft the winning progency proposition over time. As long as we can show upside, there is money to be shared. We then need to show how Netcore Progency is better positioned than both internal teams and others in the industry to deliver on this promise.
Finally, I would create an Inbound@Scale play. A combination of content talking about the problems (my essays, to begin with), webinars, playbooks, along with free utilities and calculators could help in bringing traffic. Offering audits and EnCoRe Triad health reports would also help with incoming traffic and word-of-mouth spread.
This is a starting roadmap. The real game begins when the plan meets the market.
8
Why No
Even as I believe Netcore should create its own progency, it is important to consider the counter. What are the reasons why Netcore should not do it? Doing this exercise will help the leadership team make a reasoned choice.
There are three objections to Netcore Progency that I can think of.
First, Netcore’s DNA is not services; progency is all about a service-first model even though it is built on a software stack. There are good reasons why there are no precedents of companies with a hybrid model succeeding. While software companies can have small services and consulting teams, their scale is small compared to the overall business.
Second, the progency could divert resources from existing teams. In fact, it would take away some of the best talent at a time when they are most needed – to build the Profipoly Stack and help with the transition to Netcore 2. This could also lead to a dilution of focus away from the core SaaS platform.
Third, there is a possibility that in the short-run, the progency model could cannibalise revenues from existing business. The uncertainty of how much a progency can generate would impact the certainty of revenues today. A future upside at the cost of today’s cash flow would not be an acceptable outcome.
What would the response to each of these criticisms be?
To the DNA point, I would say that this is definitely a new, untested idea. Can a software company build an equally large service business? History says No. Successful IT service companies do not have their own products, and most large product companies tend to stay away from building in-house servicing teams. But if we look beyond the IT and enterprise software sector, vertical integration is quite common. Who would have thought that one day not only would companies like Apple, Google, and Microsoft be making their own hardware but also their own chips! Industries evolve. The martech industry is caught in a low-equilibrium because it is not possible for martech service firms to scale because the service dollars are not large enough and they do not have the tech expertise to make a play for the AdWaste upside. Martech needs a reboot, and progency is the answer.
The second and third points about people and revenues are problems which are internal to Netcore. This is a call entrepreneurs and CEOs must make – they have to think not just about today but also about tomorrow. Taking bold bets open new doors which otherwise would never have been opened. There is no zero-risk decision. In fact, maintaining the status quo may be the biggest risk of them all.
To summarise: yes, there are risks and possible downsides. But as I see it, the upside potential is far greater. Since Netcore is a proficorn and has no external investors, decision-making is much easier. Netcore is one of the few martech companies which can make the progency bet without batting an eyelid. Entrepreneurs must fall in love with the problem first, and there is no bigger problem in the marketing world than the $200 billion AdWaste.
9
Endgame
We now come to our final question. Could the inception of “Netcore Progency” pave the way for Netcore’s own pathway to becoming a profipoly? For me, this is the most exciting of the four questions. Done right, the progency can help Netcore create not just a new profits engine but also a profipoly. Let’s see how. But before I begin, a small side story.
In late 1996, two big changes happened to IndiaWorld. We had to change our domain and the $20 annual subscription fee for content had to be dropped. Traffic and revenues dropped. It was one of the toughest periods I have faced as an entrepreneur. I had to not only create a new address but also a new business model. As it happens in life, only when you let go of something can you catch something else. In this case, the decisions were forced on me. So, I had no choice. A year later, I would reflect that these were the best things to have happened to me because it forced changes which I wasn’t even thinking about. The new addresses – Samachar, Khoj, Khel, Bawarchi – created far greater stickiness in people’s minds than IndiaWorld had. The new business model of ads brought in predictability and infinite scale. The troublesome period ended with me making decisions which had a 10-100X multiplier compact on IndiaWorld’s value. Not only did they change the course of the company, but also my life.
The progency can do something similar for Netcore. Today, we, like everyone, play the small game of consumables and traffic. We don’t link our revenues with business outcomes for our customers. In the small game of tens and hundreds of millions of dollars, we are not seeing the elephant in the room – tens and hundreds of billions of dollars being spent annually in AdWaste. But to open the second door, we may need to close the first door. And the ones who can open the second door can get an advantage which will be hard for others to match. This is the question we at Netcore have to address.
The progency can drive a flywheel of innovations because of its proximity to end customers and their daily lives. The learnings on what works and what doesn’t will not be channelised through marketing teams anymore. More data will help generate sharper insights for even better outcomes. The progency has as much skin in the game as the brand – in fact more, because the progency is making upfront investments and is paid only when revenues grow. The progency introduces a discontinuity in the martech market – a new model very different from the old. It is what Google did when it shifted the industry from the impression-based pricing (CPM) to action-based pricing (CPC).
Netcore would need to build on two fronts: the tech stack to stay ahead of the game, and the people factory, to ensure there are specialists who can combine the product and AI insights with their own judgement to deliver the right outcomes for brands. It would be an exciting future – a blue ocean in the red ocean. This is an opportunity to transform not just Netcore’s future, but also change the course for tens of thousands of brands who have forced themselves into captivity with their senseless AdWaste spending.
So, will Netcore Progency see the light of day? Can it scale rapidly to tens and hundreds of millions of dollars? Watch this space!